However, sales have since picked up strongly, it said in a research note issued on Aug 25. To further boost its RM743 million unbilled sales (which provides more than a year’s earnings visibility), SunCity is planning over RM1 billion in new launches for 2010.
"We raise our target price to RM4.20 (from RM3.70) on the improved property market outlook," it said. It had a buy at RM3.28.
On the earnings, Maybank Research said they were its expectations, but in-line with market. Its net profit of RM26 million (up 34% on-year, down 7% on-quarter) was reported for 4QFY09. Besides slower sales and construction delays, the leisure and hospitality segments were affected by the influenza A(H1N1) epidemic.
These were mitigated by steady property investment contributions. The earnings before interest, tax and depreciation margin was flattish on-quarter at 29.4% but 6.3 percentage points weaker on-year on reduced contributions from the leisure, hospitality and healthcare businesses.
"We cut our FY09 net profit forecast by 9% following the latest results release. However, we increase our 2010-11 earnings forecasts on the improved property market outlook.
Maybank Investment Research said it liked SunCity for its stable and mature investment properties which contributed 71% of the group’s 12MFY09 EBIT.
"We raised our target price to RM4.20 based on a 25% discount to our RM5.60 realised net asset value (previously RM3.70 on 1.0 times book-value. This is equivalent to 13.3 times forward price-to-earnings ratio," it said.
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